IATA calls for Indian reform

The International Air Transport Association (IATA) has called for what it describes as an “India Inc.” approach to resolve India’s aviation crisis and improve competitiveness to drive economic and social benefits.

26th Jul 2012

The International Air Transport Association (IATA) has called for what it describes as an “India Inc.” approach to resolve India’s aviation crisis and improve competitiveness to drive economic and social benefits.

“Indian aviation is in a multi-faceted crisis. Before aviation can deliver greater benefits to the Indian economy, this crisis must be resolved with coordinated public policies. It’s time for a grand plan to build India’s aviation future and thereby strengthen the Indian economy. To do that, we need an ‘India Inc.’ approach that addresses the crippling issues of high costs, exorbitant taxes and insufficient infrastructure,” warnedTony Tyler, IATA’s director general and CEO in his keynote address to the Confederation of Indian Industry.

IATA says that aviation in India supports 1.7 million jobs, 0.5% of GDP and 90% of international tourist arrivals. “That’s impressive but it could and will be much more. Today, India is a market of about 100 million passengers annually. Looking ahead, if Indians traveled as much as Americans, we would see a market potential of over 2 billion travelers,” said Tyler. Despite this great potential, India’s airline industry is struggling financially. Indian airline losses approached US$2 billion for the year ended March 2012, after losing an estimated US$3.5 billion over the three previous years.

“A bright future is at hand for Indian aviation if we can find common purpose among all stakeholders. India must not settle for a bronze medal in global aviation. If we can take deliberate action on a handful of critical issues—reducing taxes, ensuring capacity and keeping costs in check—a gold is entirely possible. And the benefits of such an effort will be shared across the entire economy,” said Tyler.

Tyler added: “The high cost of doing aviation business in India is squeezing the lifeblood out of the airline sector. Infrastructure costs and taxes need urgent attention,” said Tyler who focused his comments on airport charges and fuel taxes.